Estimating Alternative Technology Sets in Nonparametric Efficiency Analysis: Restriction Tests for Panel and Clustered Data
Nonparametric efficiency analysis has become a widely applied technique to support industrial benchmarking as well as a variety of incentive- based regulation policies. In practice such exercises are often plagued by incomplete knowledge about the correct specifications of inputs and outputs. Simar and Wilson (2001) and Schubert and Simar (2011) propose restriction tests to support such specification decisions for cross-section data. However, the typical oligopolized market structure pertinent to regulation contexts often leads to low numbers of cross-section observations, rendering reliable estimation based on these tests practically unfeasible. This small-sample problem could often be avoided with the use of panel data, which would in any case require an extension of the cross-section restriction tests to handle panel data. In this paper we derive these tests. We prove the consistency of the proposed method and apply it to a sample of US natural gas transmission companies in 2003 through 2007. We find that the total quantity of gas delivered and gas delivered in peak periods measure essentially the same output. Therefore only one needs to be included. We also show that the length of mains as a measure of transportation service is non-redundant and therefore must be included.
|Date of creation:||2013|
|Contact details of provider:|| Postal: Mohrenstraße 58, D-10117 Berlin|
Web page: http://www.diw.de/en
More information through EDIRC
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Daniel Hollas & Kenneth Macleod & Stanley Stansell, 2002. "A data envelopment analysis of gas utilities' efficiency," Journal of Economics and Finance, Springer;Academy of Economics and Finance, vol. 26(2), pages 123-137, June.
- Jamasb, Tooraj & Pollitt, Michael & Triebs, Thomas, 2008.
"Productivity and efficiency of US gas transmission companies: A European regulatory perspective,"
Elsevier, vol. 36(9), pages 3398-3412, September.
- Jamasb, T. & Pollitt, M.G. & Triebs, T., 2008. "Productivity and Efficiency of US Gas Transmission Companies: A European Regulatory Perspective," Cambridge Working Papers in Economics 0812, Faculty of Economics, University of Cambridge.
- Homburg, Carsten, 2001. "Using data envelopment analysis to benchmark activities," International Journal of Production Economics, Elsevier, vol. 73(1), pages 51-58, August.
- Gerald Granderson, 2000. "Regulation, Open-Access Transportation, and Productive Efficiency," Review of Industrial Organization, Springer;The Industrial Organization Society, vol. 16(3), pages 251-266, May.
- Torben Schubert & Léopold Simar, 2011. "Innovation and export activities in the German mechanical engineering sector: an application of testing restrictions in production analysis," Journal of Productivity Analysis, Springer, vol. 36(1), pages 55-69, August.
- Paul L. Joskow, 2014.
"Incentive Regulation in Theory and Practice: Electricity Distribution and Transmission Networks,"
in: Economic Regulation and Its Reform: What Have We Learned?, pages 291-344
National Bureau of Economic Research, Inc.
- Joskow, P.L., 2006. "Incentive Regulation in Theory and Practice: Electricity Distribution and Transmission Networks," Cambridge Working Papers in Economics 0607, Faculty of Economics, University of Cambridge.
- Paul L Joskow, 2005. "Incentive Regulation In Theory And Practice - Electricity Distribution And Transmission Networks," Working Papers 0514, Massachusetts Institute of Technology, Center for Energy and Environmental Policy Research.
- Brophy Haney, A. & Pollitt, M.G., 2009.
"Efficiency Analysis of Energy Networks : An International Survey of Regulators,"
Cambridge Working Papers in Economics
0926, Faculty of Economics, University of Cambridge.
- Haney, Aoife Brophy & Pollitt, Michael G., 2009. "Efficiency analysis of energy networks: An international survey of regulators," Energy Policy, Elsevier, vol. 37(12), pages 5814-5830, December.
- Simar, L. & Wilson, P.W., 1999.
"Statistical Inference in Nonparametric Frontier Models: the State of the Art,"
9904, Catholique de Louvain - Institut de statistique.
- Léopold Simar & Paul Wilson, 2000. "Statistical Inference in Nonparametric Frontier Models: The State of the Art," Journal of Productivity Analysis, Springer, vol. 13(1), pages 49-78, January.
- Alois Kneip & Léopold Simar & Paul W. Wilson, 2006.
"Asymptotics and Consistent Bootstraps for DEA Estimators in Non-parametric Frontier Models,"
Bonn Econ Discussion Papers
bgse12_2006, University of Bonn, Germany.
- Kneip, Alois & Simar, Léopold & Wilson, Paul W., 2008. "Asymptotics And Consistent Bootstraps For Dea Estimators In Nonparametric Frontier Models," Econometric Theory, Cambridge University Press, vol. 24(06), pages 1663-1697, December.
- Dyson, R. G. & Allen, R. & Camanho, A. S. & Podinovski, V. V. & Sarrico, C. S. & Shale, E. A., 2001. "Pitfalls and protocols in DEA," European Journal of Operational Research, Elsevier, vol. 132(2), pages 245-259, July.
- Shuttleworth, Graham, 2005. "Benchmarking of electricity networks: Practical problems with its use for regulation," Utilities Policy, Elsevier, vol. 13(4), pages 310-317, December.
- Vogelsang, Ingo, 2002. "Incentive Regulation and Competition in Public Utility Markets: A 20-Year Perspective," Journal of Regulatory Economics, Springer, vol. 22(1), pages 5-27, July.
- Jamasb, T. & Pollitt, M., 2001. "International Benchmarking and Yardstick Regulation: An Application to European Electricity Utilities," Cambridge Working Papers in Economics 0115, Faculty of Economics, University of Cambridge.
- Thompson, Russell G. & Dharmapala, P. S. & Thrall, Robert M., 1995. "Linked-cone DEA profit ratios and technical efficiency with application to Illinois coal mines," International Journal of Production Economics, Elsevier, vol. 39(1-2), pages 99-115, April.
- Mehdi Farsi & Aurelio Fetz & Massimo Filippini, 2007. "Benchmarking and Regulation in the Electricity Distribution Sector," CEPE Working paper series 07-54, CEPE Center for Energy Policy and Economics, ETH Zurich.
- Kneip, Alois & Park, Byeong U. & Simar, L opold, 1998. "A Note On The Convergence Of Nonparametric Dea Estimators For Production Efficiency Scores," Econometric Theory, Cambridge University Press, vol. 14(06), pages 783-793, December.
- SIMAR, Léopold & WILSON, Paul, 1995.
"Sensitivity Analysis to Efficiency Scores : How to Bootstrap in Nonparametric Frontier Models,"
CORE Discussion Papers
1995043, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Léopold Simar & Paul W. Wilson, 1998. "Sensitivity Analysis of Efficiency Scores: How to Bootstrap in Nonparametric Frontier Models," Management Science, INFORMS, vol. 44(1), pages 49-61, January.
- Simar, L. & Wilson, P.W., "undated". "Sensitivity analysis of efficiency scores: how to bootstrap in nonparametric frontier models," CORE Discussion Papers RP 1304, Université catholique de Louvain, Center for Operations Research and Econometrics (CORE).
- Léopold Simar & Paul Wilson, 2011. "Inference by the m out of n bootstrap in nonparametric frontier models," Journal of Productivity Analysis, Springer, vol. 36(1), pages 33-53, August.
- Jamasb, Tooraj & Nillesen, Paul & Pollitt, Michael, 2004. "Strategic behaviour under regulatory benchmarking," Energy Economics, Elsevier, vol. 26(5), pages 825-843, September.
- Astrid Cullmann, 2012. "Benchmarking and firm heterogeneity: a latent class analysis for German electricity distribution companies," Empirical Economics, Springer, vol. 42(1), pages 147-169, February.
- R. D. Banker & A. Charnes & W. W. Cooper, 1984. "Some Models for Estimating Technical and Scale Inefficiencies in Data Envelopment Analysis," Management Science, INFORMS, vol. 30(9), pages 1078-1092, September.
- Robin C. Sickles & Mary L. Streitwieser, 1998. "An analysis of technology, productivity, and regulatory distortion in the interstate natural gas transmission industry: 1977-1985," Journal of Applied Econometrics, John Wiley & Sons, Ltd., vol. 13(4), pages 377-395.
- Léopold Simar, 2003. "Detecting Outliers in Frontier Models: A Simple Approach," Journal of Productivity Analysis, Springer, vol. 20(3), pages 391-424, November.
- Tim Coelli & Antonio Estache & Sergio Perelman & Lourdes Trujillo, 2003.
"A Primer on Efficiency Measurement for Utilities and Transport Regulators,"
World Bank Publications,
The World Bank, number 15149, April.
- Antonio Estache & Tim Coelli & Sergio Perelman & Lourdes Trujillo, 2003. "A Primer on Efficiency Measurement for Utilities and Transport Regulators," ULB Institutional Repository 2013/44106, ULB -- Universite Libre de Bruxelles.
- Schefczyk, Michael, 1993. "Industrial benchmarking: A case study of performance analysis techniques," International Journal of Production Economics, Elsevier, vol. 32(1), pages 1-11, August.
- Jamasb, Tooraj & Pollitt, Michael, 2003. "International benchmarking and regulation: an application to European electricity distribution utilities," Energy Policy, Elsevier, vol. 31(15), pages 1609-1622, December.
- M.E. Beesley & S.C. Littlechild, 1989. "The Regulation of Privatized Monopolies in the United Kingdom," RAND Journal of Economics, The RAND Corporation, vol. 20(3), pages 454-472, Autumn.
- Pastor, Jesus T. & Ruiz, Jose L. & Sirvent, Inmaculada, 1999. "A statistical test for detecting influential observations in DEA," European Journal of Operational Research, Elsevier, vol. 115(3), pages 542-554, June.
When requesting a correction, please mention this item's handle: RePEc:diw:diwwpp:dp1283. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Bibliothek)
If references are entirely missing, you can add them using this form.